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Income Tax - Case Laws
Showing 1 to 20 of 584 Records
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2017 (6) TMI 1392
TP Adjustment - Global Sale and Marketing Activity Fees and MAM applied by the TPO - HELD THAT:- The international transactions of the assessee involve charges for raw material and components, sales and manufacturing goods, reimbursement of expenses, payment towards royalty and management fees, charges of capital equipment, payment of intra-goods services, charges of material, commission income, rendering of software services, reimbursement of expenses and Global Sale and Marketing Activity Fees. The TPO has accepted all other transactions except the international transactions regarding Global Sale and Marketing Activity Fees.
International transactions of the assessee are comprising of revenue receipt from the AE as well as revenue payment to the AE. Therefore in these facts and circumstances of the case, we find that when the other international transactions regarding revenue receipt from the AE are tested under the TNMM analysis then the transaction of fee payment by the assessee towards the services rendered by the AE should not be separately tested but all the international transactions having receipt from the AE and payment to the AE shall be clubbed together and then has to be analysed under TNMM.
DRP has directed the TPO to determine the ALP in respect of the Global Sale and Marketing Activity Fees instead of considering the ALP at NIL. Therefore in principle we do not find any error or illegality in the directions of the DRP however having regard to the peculiar facts and circumstances of the case wherein the assessee is having multiple and diversified international transactions involving receipt as well as payment, we are of the considered view that the payment in respect of management fees as well as Global Sale and Marketing Activity Fees shall be considered as operating cost and has to allocated in the ratio of turnover of the other international transactions and then the ALP of the other international transactions has to be determined under TNMM analysis.
Thus we set aside the entire issue of determination of ALP and TP Adjustment to the record of the TPO/A.O. for carrying out fresh exercise of determination of ALP in respect of international transactions by considering the payment in respect of management fees and Global Sale and Marketing Activity Fees as part of the operating cost and allocating the same in the ratio of the turnover of the other international transactions.
Foreign tax credit and TDS credit not granted despite the directions of the DRP - assessee has also filed a petition under Section 154 of the Act which is pending disposal before the TPO/A.O - HELD THAT:- There is no quarrel on the point that the AO is bound to follow the directions of the DRP and pass the final order in pursuant to the directions of the DRP. Accordingly, we direct the AO to strictly give effect to the directions of the DRP and dispose of the petition filed by the assessee u/s 154 of the Act.
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2017 (6) TMI 1391
Book profits computation u/s115JB - debenture redemption reserve - whether it is not a ‘reserve’ within the meaning of explanation 1(b) of the section 115JB? - HELD THAT:- In our considered opinion, having regard to the judgment of Raymond Ltd. (2012 (4) TMI 127 - BOMBAY HIGH COURT] as well as the decision JSW Energy (2013 (7) TMI 192 - ITAT MUMBAI] the impugned issue is no longer res integra. In the case of JSW Energy (supra), the Tribunal was considering the deductibility of the amount set apart as Debenture Redemption Reserve for the purposes of computing the book profits u/s 115JB of the Act.
After detailed discussion, it has been held that adjustment of the amount of Debenture Redemption Reserve made while computing the book profits u/s 115JB of the Act is permissible and is within the purview of the law. The decision of CIT(A) is in consonance with the aforesaid legal position and even before us, no contrary decision has been brought out by the Revenue and as a consequence, we hereby affirm the decision of CIT(A) on this aspect. Thus, the Revenue fails in its appeal.
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2017 (6) TMI 1389
Addition u/s 68 - unexplained loan - as per AO assessee has failed to prove the identity, genuineness and creditworthiness of the loan creditors and the loan creditors are not found at the address given and loan creditors are showing nominal income and hence, accumulation of fund to such an extent is not possible - contention of the assessee that he had discharged initial burden cast upon him by filing confirmation letters along with other evidences to prove the identity, genuineness of the transaction and creditworthiness of the parties. Once, three ingredients are proved, the assessee doesn't required to prove the sources of source.
HELD THAT:- Assessee has furnished confirmation letters in respect of all loan creditors. We further observed that the assessee has filed income tax returns along with bank statements of all loan creditors. All the loan creditors are assessed to Income tax and loans has been given by cheque.
We further observed that the A.O has summoned trustees of the trust who had appeared before the A.O and given a statement u/.s 131, wherein they have clearly admitted that they have advanced loan to the assessee. In respect of remaining three parties, though they are not appeared before the A.O, the assessee has filed necessary details that these loans have been repaid by cheque in the next financial year.
Therefore assessee has discharged his initial burden cast upon him by filing identity, genuineness and creditworthiness of the parties. Once, three aspects has been proved, then the onus shifts to the A.O to prove otherwise. In this case, the A.O ignoring all evidences filed by the assessee, simply made additions on the simple reason that creditors are not having sufficient source of income to explain loan given to the assessee. If at all, the A.O having any doubt on the capacity of the loan creditors, he is free to proceed against the loan creditors as per the law, but he cannot make additions towards, loan creditors u/s. 68 of the Act, once the assessee has discharged his initial burden.
In this case, on perusal of the facts available on record, we find that the assessee has filed necessary evidences to prove the identity, genuineness of the transaction and creditworthiness of the parties. Therefore, we are of the considered view that the A.O was erred in making additions towards unsecured loans u/s. 68 - Decided in favour of assessee.
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2017 (6) TMI 1388
TP Addition u/s 92CA(3) - MAM selection -TNMM or CUP Method - aggregation-approach under TNMM for benchmarking international transactions relating to royalty and FTS at entity level rejected - HELD THAT:- As decided in assessee own case Hon’ble Delhi High Court at New Delhi [2017 (1) TMI 389 - DELHI HIGH COURT] the issue was remanded back to the file of the TPO and the direction was given to apply the TNMM at the entity level. The Hon’ble Jurisdictional High Court in the aforesaid order by following the judgment in the case of Magneti Marelli Powertrain India Pvt. Ltd. [2016 (11) TMI 123 - DELHI HIGH COURT] remitted the issue back to the file of the TPO for reconsideration.
Thus we remand this issue back to the file of the AO/TPO to be decided as has been directed. Appeal of the assessee is allowed for statistical purposes.
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2017 (6) TMI 1386
Reopening of assessment u/s 147 - deduction u/s.36(1)(viia) - HELD THAT:- As rightly relied upon by the Ld.DR on the Hon’ble Supreme Court judgment in the case of [1997 (10) TMI 5 - SUPREME COURT] re-opening of the case on the basis of factual error pointed out by the Audit Party is permissible under law.
What is brought to the notice of the AO by the Audit Party was the factual error and it is a fact that the assessee had claimed the deduction against the provisions made by under NPA and there was prima facie case for under assessment - Therefore, we do not find any error in the re-opening of assessment and uphold the issue of notice u/s.148 - CIT(A) also relied on the decision in the case of CIT v. Raman & Co [1967 (7) TMI 2 - SUPREME COURT] and we uphold the order of the Ld.CIT(A) and dismiss the ground of the appeal of the assessee on this issue.
Addition made u/s.36(1)(viia) - assessee has created NPA provisions and claimed the deduction in respect of the provisions for bad and doubtful debts - AR argued that the assessee has already made the provision in the earlier years which was unadjusted and brought forward in the books - HELD THAT:- In Income Tax, each year is an independent and the income has to be computed as per the system of accounting regularly followed by the assessee. Therefore, the deduction can be made by the assessee only on the basis of the expenditure debited to the Profit & Loss A/c from the previous year relevant to the AY under consideration. No expenditure which is not debited to the Profit & Loss A/c in the year under consideration is permissible for deduction.
In the instant case, the assessee has not debited the expenditure relating to the provisions for bad and doubtful debts. Therefore, the deduction u/s.36(1)(viia) is permissible to the extent of the amount debited to the Profit & Loss A/c or as per the permissible limits specified u/s.36(1)(viia) whichever is less. The contention of the assessee that the reserves already created in the earlier years is available in the books of accounts which remained unadjusted is not an acceptable proposition and not as per the Income Tax Act - the deduction is permissible only to the extent of provisions actually created in the books of accounts for the relevant Assessment Year. Decided against assessee.
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2017 (6) TMI 1385
TP Adjustment - MAM - adopting TNMM at entity level - assessee contended that the assessee-company submitted that TP study report adopting TNMM at entity level and this was accepted by the TPO and therefore, there was no need of separate bench marking in respect of transactions of royalty and technical fee as the same formed part of operating expenditure - HELD THAT:- In the present case, the TP study submitted by the assessee was accepted by the TPO. However, the TPO had chosen to make a separate bench marking in respect of transaction of royalty and management fees.
There is no dispute that there was a close nexus between these transactions and other transactions. Therefore, it requires aggregation of these transactions with other transactions, and the most appropriate method is to adopt TNMM at entity level for the purpose of the bench marking the transactions.
Accordingly, we remand the matter back to the file of the TPO/AO to aggregate transaction of royalty and management fee with other transactions and bench mark the same with other transactions by adopting TNMM at entity level.
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2017 (6) TMI 1383
Procedure when assessee claims identical question of law is pending before High Court or Supreme Court u/s 158A - Tribunal disallowing depreciation on the block of assets still in existence disregarding the provisions of section 32 of the Act - Whether Tribunal is justified recasting the audited book results for the purpose of computation of book profit under section 115JB?”
HELD THAT:- As per section 158A of the Act, assessee has filed the appeal for assessment years 2006-07 and 2007-08 before the Hon’ble Bombay High Court. Assessee has given undertaking in form No.8, rule 16. Therefore, all these matters are restored to the file of AO and the AO is directed to decide the appeals as per the outcome of the Hon’ble Bombay High Court.
In the result, all the appeals are restored to the file of the AO and AO is directed to decide the matters as per the decision stated above.
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2017 (6) TMI 1382
TDS u/s 192 - Addition u/s 40a(ia) - disallowance of payments made to employees - whether sec 40(a)(ia) being not applicable as no amount was payable as at the year-end? - Revenue denied the claim on the basis that the expenditure has been merely routed through the books of its sister concerns, which were inoperational, so that their staff was surplus - HELD THAT:- Section 40(a)(ia) places an additional burden, i.e., of deduction of tax at source and its payment to the credit of the Central Government qua the specified sum/s, for its deduction in computation of business income, so that the very fact of its invocation implies that the condition of deductibility is otherwise met.
The applicability of TDS in such a case would depend on the nature of the payment and the work done (by the sister concerns). If, on the other hand, the debit notes state of only the employees having been deputed to the assessee-company, which may deploy them for any work it deems fit and proper for the purpose of its business, it would be a case of the employees being made available to the assessee-company. The payment in such a case would have to be directly to the concerned persons in-as-much as they stand seconded, i.e., are on deputation, to the assessee-company, even as they continue to be the regular employees of and on the rolls of their parent firms. The TDS in this, latter case would be on ‘salary’, i.e., as against on the aggregate payments made/credit allowed (during the year) directly to the sister concern/s, as the obligation to pay salary thereto, on account of second-ment/deputation, is on the assessee-company. How, we wonder, could this be regarded as a case of reimbursement of expenditure? The assessee need not have credited, or routed the transaction through, the account of the sister concern/s. That is, considered either way, it is not a case of reimbursement of expenditure. This is precisely what the Revenue means when it states that the assessee-company has merely routed the expenditure through the account of the related parties, and that therefore nothing turns thereon.
Be that as it may, where, however, the concerned employees, or the sister concerns, as the case may be, have discharged their tax liability on the relevant income/s, the assessee-company, following the procedure enshrined in s. 40(a)(ia) r/w. s. 201 (as amended by Finance Act, 2012), claim saving from the rigor of s. 40(a)(ia). This is as the said amendments have been clarified by the Hon'ble Courts, as in the case of CIT v. Ansal Landmark Township (P.) Ltd. [2015 (9) TMI 79 - DELHI HIGH COURT] as curative and, therefore, retrospective.
Amendment, by precluding application of s. 40(a)(ia) in cases where the payee/creditor has discharged the tax liability on the relevant sum for the relevant year, only seeks to operationalize and apply the decision Hindustan Coca Cola Beverages (P.) Ltd.[2007 (8) TMI 12 - SUPREME COURT] The matter, accordingly, setting aside the impugned order, is, for fresh determination, on the lines indicated above, restored to the file of the AO, to do so by issuing definite findings of fact. The assessee, on whom the burden to establish its’ claims lie, shall be allowed proper opportunity to represent its case before him. Assessee’s appeal is allowed for statistical purposes.
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2017 (6) TMI 1381
TP Adjustment - ALP determination - arrangement between the assessee and its AE - HELD THAT:- Since the issue in dispute is arising from identical facts and circumstances as in the earlier/later years, it is, therefore, covered by the decision of the co-ordinate bench of the Tribunal in the assessee's own case for asst. years 2004-05 to 2007-08 and asst. year 2009-10.
In this factual view of the matter, and following the aforesaid decisions of the co-ordinate benches of the Tribunal (Supra), we hold that where the TPO has accepted the transaction to be at ALP in the hands of the AE, then he cannot take a different stand in the case of the other party to the transaction, i.e, the assessee therein in the case on hand and accordingly set aside the orders of the AO/TPO on this issue. Consequently, the grounds raised by the assessee are allowed as indicated above. Assessee appeal allowed.
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2017 (6) TMI 1377
Unexplained investment u/s 69 - investment in an agricultural land - source of loan amount could not be explained - AO observed that the assessee had made investment in an agricultural land the source of investment was stated to be source of the source of loan taken to the other persons was claimed to have been taken from Smt. Anita Kumari was doubted by the AO - HELD THAT:- AO made addition on the ground that the source of the source of loan amount could not be explained. CIT(A) in his order has observed that the AO in his remand report, reported that source of loan was stated to be cash withdrawal from the bank account of her husband. Moreover, the factum of sale of agricultural land by the Husband of Smt. Anita Kumari is not disputed by the Revenue.
CIT(A) has adopted a possible view with regard to availability of fund from deposit in the banks accounts of Smt. Anita Kumari.
AO did not bring any material on records suggesting that the cash belonged to the assessee. Hence, we see no merit into the ground of the revenue. Appeal of the revenue is dismissed.
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2017 (6) TMI 1376
Allowable Revenue expenses u/s 37(1) - cost towards development of software products, solutions and management - treatment as expenditure as incurred for the purpose of setting up a new project -Expenditure incurred on development of a product of the same line of business - HELD THAT/:- We find assessee is engaged in the business of developing software, that it had debited an amount as exceptional item in its books of accounts under the head developing a new item, that the expenditure of the product pertained to the AY. 2004-05 to AY. 2007-08, that in the year under consideration it abandoned the development of the software, that it claimed the expenditure as revenue expenditure.
Expenditure incurred on development of a product of the same line of business, in our opinion, held to be allowed as revenue expenditure. It is possible that the assessee, may due to certain reasons, abandoned the product but that would not make the expenditure of capital nature. Entries in the books of accounts are important to a certain extent only. What is to be seen is the real nature of the expenditure. In the case under consideration the incurring of expenditure is not in doubt, the AO has not held that expenditure was not incurred for development of software i. e. for the existing business of the assessee. See IL & FS Education and Technology Services Private Ltd [2013 (4) TMI 992 - ITAT CHENNAI] , M/S BINANI CEMENT LTD.[2015 (3) TMI 849 - CALCUTTA HIGH COURT] and Indoram Synthetic India Private Ltd. [2009 (9) TMI 635 - DELHI HIGH COURT]
Thus we hold that the order of the FAA does not suffer from any legal or factual infirmity. As far as case of EID Perry[2001 (11) TMI 25 - MADRAS HIGH COURT] is concerned, we would like to state that in that matter the Hon’ble Madras High Court had held that it was clear from the assessee’s own case that the expenditure was incurred for the purpose of setting up a new project. The case before us, is not of ‘setting up of new project’. In that matter the assessee, a manufacturer of sugar, wanted to set up a new project for the manufacture of methanol. Thus, the case is of no help to decide the issue. Effective ground of appeal against the AO.
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2017 (6) TMI 1374
Disallowance of expenses debited during the year on estimate basis - Addition of some of the expenses claimed are disproportionate and also that some of the expenses are not vouched and verifiable - HELD THAT:- CIT (Appeals) observed that variation in expense of one head in a year as compared to earlier year cannot be the basis to make an addition, especially when overall gross profit and net profit was showing an increasing trend. He noted further that when books of accounts were duly audited and AO did not point out any specific defects in the books of accounts and no expenses had been found to be of non-business nature, the ad-hoc disallowance of Rs.2 lakhs made by the AO was not warranted. We fully concur with the finding of the ld. CIT (Appeals) as even an estimation of disallowance needs some basis to justify the action of the AO in this regard as just and reasonable. It is an established proposition of law that even discretion is to be exercised judiciously. While examining the action of the AO in making the ad-hoc disallowance in question, CIT (Appeals) has noted that books of accounts were duly audited and no specific defects were found therein by the AO nor was any allegation that expenses had been incurred for non-business purposes. He has further noted that the assessee has shown better trading result during the year in comparison to last three years and there was increasing trend. The first appellate order is thus reasoned one and does not need any interference by the Tribunal. The same is upheld. Ground No. 1 is accordingly rejected.
Disallowance being the amount of revenue expenditure under various heads of expenditure capitalized in the books of accounts as intangible know-how and new brand development, which the assessee in its return of income had claimed as revenue expenditure - HELD THAT:- The Hon’ble Supreme court in the case of Empire Jute Company [1980 (5) TMI 1 - SUPREME COURT] has been pleased to hold that it is only when an enduring advantage is in the capital field that the expenditure would be disallowable. If advantage of enduring benefit is in the Revenue field it would be on the Revenue account.
The Hon’ble jurisdictional High Court of Delhi in the case of CIT Vs. Siti Financial Consumer Fin. Ltd. [2011 (3) TMI 622 - DELHI HIGH COURT] has been pleased to hold that advertisement and publicity expenses even when substantial, having been incurred to facilitate business, no advantage in capital field is resulted. Again in the case of CIT Vs. Usha Iron & Ferro Metal Corporation Ltd. [2007 (5) TMI 170 - DELHI HIGH COURT] the to hold that the expenditure incurred by the assessee towards improving its business was for the expansion of its existing business.
Merely because the assessee treated the amount as a capital expenditure in its books, it would not be bound by as there is no estoppels against the law and just assessment is the object of the Legislature under the provisions of the I. T. Act. The first appellate order on the issue is comprehensive and reasoned one to which we fully concur with. The same is upheld. Ground No. 2 is accordingly rejected.
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2017 (6) TMI 1373
Unexplained cash deposits in bank account - assessee submitted that the cash deposits is made out of the sale proceeds of a property sold by his wife - HELD THAT:- The purchase made by the assessee’s wife in year 2008 for Rs.2 lakhs has been sold in the year 2011 for a sum of Rs.3,35,700/-. There is no material on record nor any evidence produced by the assessee before the Tribunal to show that the assessee’s wife had received a sum of Rs. 31 lakhs on the sale of property vide sale deed No.201/2011 (sale deed dt 20-1-2011). In the absence of any material produced by the assessee, I have no other option but to confirm the addition of Rs.30 lakhs made by the Assessing Officer.
Assessing Officer has not given credit of Rs.3,35,700/- disclosed in sale deed against the cash deposits of Rs. 30 lakhs. As long as the Department does not have a case that the sale proceeds of the assessee’s wife has not been deposited in any other Bank account, I am of the view that the sum of Rs.3,35,700/- disclosed in the sale deed of the assessee’s wife should be given due credit against the cash deposits of Rs.30 lakhs in assessee’s ICICI Bank account. Therefore, the assessee gets the benefit of Rs.3,35,700/- and balance of Rs. 26,64,300/- (Rs.30,00,000 – Rs.3,35,700 = Rs.26,64,300) is sustained as income of the assessee from the undisclosed sourceC- Appeal filed by the assessee is partly allowed.
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2017 (6) TMI 1371
Disallowance u/s 14A r.w.r. 8D - additional disallowance u/s. 14A qua investment where the amount is still lying in share application money pending allotment of shares - HELD THAT:- DR has not been able to show any material difference in the facts and circumstances in the assessment year under appeal vis-à-vis assessment year 2009-10, wherein these issues have been considered and adjudicated by the Co-ordinate Bench of the Tribunal in favour of the assessee. Following the decision of Co-ordinate Bench of the Tribunal, we allow ground No. 1 of the main grounds of appeal and the additional ground Nos. 1 to 3 raised by the assessee.
We have also considered the judgment in the case of Pradeep Kar Vs. Assistant Commissioner of Income Tax [2009 (6) TMI 331 - KARNATAKA HIGH COURT] We find that the facts in the said case are entirely different. The issue before the Hon’ble High Court in said case was with respect to disallowance u/s. 14A on investment made in shares by using borrowed funds. In the backdrop of above facts the Hon’ble Court held; u/s. 14A, expenditure relating to exempt income is not allowable. In our considered view, the above judgment does not support the case of Department.
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2017 (6) TMI 1370
Estimation of income - Bogus purchases - assessee has purchased materials from the parties so identified by the Sales tax department - CIT(A) restricted the addition to 8% - HELD THAT:- Decision taken by Ld CIT(A) does not call for any interference. In the instant case, the AO has not proved that the impugned purchases have not been sold. As submitted by Ld A.R, an item cannot be sold without purchasing the same. Hence there is no reason to disallow entire amount of purchases. Accordingly, in the facts and circumstances of the case Ld CIT(A) was justified in restricting the disallowance to 8% of the alleged bogus purchases. Accordingly I uphold the order passed by Ld CIT(A) on this issue. Appeal filed by the revenue is dismissed.
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2017 (6) TMI 1369
Exemption u/s 11 - violation of provisions of section 13(1)(c)(ii) and 13(2)(b) - HELD THAT:- A perusal of the trust deed shows that the trust was created in the year 1930 i.e. much prior to the enactment of Income Tax Act, 1962. Thus, the first condition to fall within the scope of proviso to section 13(1)(c)(ii) of the Act is satisfied.
Benefit to be granted to the assessee or the person referred to in sub-section (3) in application or uses of the property or income of trust is concerned, the use or application of the property should be in compliance of the mandatory terms of the trust - From perusal of English translation of the Trust Deed it appears that the trustees were in possession of the residential part of the property on second floor. As per the assertions of ld. AR, the legal heirs of the author of the trust were in possession of part of property on ground floor as well. Admittedly, there is a clear mandate in the trust deed that part of the property which is in possession of author of the trust shall be for the sole purpose of occupancy by the author of the trust or his legal heirs. The part of the property which is subject matter of dispute are 3 shops on ground floor of the building.
From the perusal of English translation of Trust Deed the details of the property in possession of the author of the trust at the time of execution of Trust Deed is not discernible. Under such circumstances, we are of considered opinion that this issue needs a re-visit to the Assessing Officer. Representative of both the sides concur on the point that the part of property referred to in the Trust Deed has to be clearly identified - Assessing Officer is directed to ascertain the part of property which was in the possession of author of the trust at the time of execution of the trust in the year 1930, qua which mandate has been given for the exclusive use by the author of the trust and his legal heirs.
In case the shops under question are part of the property which was in possession of the author of the trust deed at the time of execution, then the assessee clearly falls within the exception as mentioned in proviso to section 13(1)(c)(ii) of the Act.
The benefit of exemption shall not be available to the extent there is violation of provisions of section 13(1)(c) and the same be brought to tax at the maximum marginal rate. In case the Assessing Officer comes to the conclusion that shops are not part of the property as mandated in the Trust Deed, the addition has to be made to the extent of violation of provision of section 13(1)(c)(ii) and 13(2)(b) of the Act. The Assessing Officer before deciding this issue afresh in accordance with our directions shall grant opportunity of hearing to the assessee, in accordance with law.
Both the appeals i.e. the appeal by the assessee in assessment year 2010-11 and the appeal of the Department in assessment year 2011-12 are allowed for the statistical purpose in the aforesaid terms.
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2017 (6) TMI 1365
Estimation of income - Bogus purchases - HELD THAT:- Even in case due to the reasons that either the assessee failed to prove the genuinity of purchases or the parties not appeared on the notices issued by the AO, under the Income Tax Act, the tax authority must tax the only real income. Thus, if the transaction is not verified, the only taxable is a taxable income component not the entire transaction.
We are of the opinion that in order to fulfil the gap of Revenue leakage, disallowance of reasonable percentage of the impugned purchase will meet the end of justice.
In the present case, the assessee has total purchase of Rs.2,09,75,237/- and the alleged bogus purchases are only of Rs.9,21,532/- which is hardly 4.39% of total purchases. The GP percentage in the present case is 23.4% which is much higher than the VAT rate charged by the Maharashtra Government. As a matter of fact, the VAT department is charged from 4% to 12.5% by the Govt. of Maharashtra on various purchases. Considering the totality of the fact and in order to fulfil the gap of Revenue leakage, the disallowance of reasonable percentage will meet the end of justice in the present case. Thus, considering the peculiarity of the present case, we deemed it appropriate to reduce the disallowance @ 10% of impugned purchases (10% of Rs. 9,21,532/-).
Hon’ble Bombay High Court in the case of CIT vs Shri Hariram Bhambhani [2015 (2) TMI 907 - BOMBAY HIGH COURT] also held that Revenue is not entitled to brought the entire disputed sale consideration, but the only profit attributable on the unrecorded sale consideration can alone be the subject to tax. With this observation, the appeal of assessee is partly allowed.
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2017 (6) TMI 1364
Revision u/s 263 - valuation of work-in-progress (WIP) and profit element contained therein - HELD THAT:- We find that in the instant case, it is not in dispute that during the course of assessment, the AO called for details of closing work-in-progress, which was furnished by the assessee and was also examined by the AO. It is not the case of the ld Commissioner of Income Tax that the Assessing Officer has not examined the valuation of closing work in progress. That being so, in our considered view, CIT could have interfered with the order of the Assessing Officer u/s.263 only when it finds that the conclusion of the Assessing Officer is either erroneous in fact or erroneous in law. Without returning a clear finding that the order of the Assessing Officer was erroneous, the ld Commissioner of Income Tax could not interfere with such an order u/s.263 for making a fishing or roving enquiry.
In the instant case, we find that CIT has simply observed that the submission of the assessee needs verification. As per the provisions of section 263, CIT could have either himself verified the submission of the assessee or could have got the submission of the assessee verified by other agencies and thereafter if he would have come to the conclusion that the order passed by the Assessing Officer in respect of the issue was actually erroneous then only he could have interfered with the order of the Assessing Officer. In the circumstances, we find that the order of the ld Commissioner of Income Tax in respect of this issue is bad in law and untenable. We, therefore, set aside the order of the Commissioner of Income Tax in respect of this issue.
As per revised computation furnished by the assessee, its total income was ₹ 11,58,84,250/-, which was mistakenly taken by the Assessing Officer at ₹ 1,58,48,250/- and short levy of interest u/s.234C - In respect of second and third issue, mentioned herein above before us, ld A.R. of the assessee has candidly conceded that there was mistake in the order of the Assessing Officer. The only submission is that the error in the assessment order in respect of the said two issues could have been rectified by the Assessing Officer u/s.154 of the Act and, therefore, exercise of power u/s.263 of the Act was excessive.
We find that as per provisions of section 263 of the Act, the ld Commissioner of Income Tax can exercise the jurisdiction when he finds that the order of the Assessing officer is erroneous and prejudicial to the interests of the revenue. Nowhere, the said section provides that if the error is apparent then powers conferred u/s.263 upon the Commissioner of Income Tax cannot be exercised. Hence, we do not find any force in the above submission of the assessee. Therefore, the order of the Commissioner of Income Tax in respect of above two issues are confirmed and the related grounds of appeal of the assessee are dismissed.
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2017 (6) TMI 1363
Exemption u/s 11 - denial of exemption by invoking the provisions of Sec.13(1)(c) - HELD THAT:- We find that Ld.CIT(A) while deciding the issue in favour of the assessee had relied on the decision of the Co-ordinate Bench of the Tribunal in assessee’s own case for A.Y. 2008-09 [2015 (3) TMI 493 - ITAT PUNE]. Before us, Revenue has not placed any material on record to demonstrate that the facts in the year under appeal are distinguishable to that of earlier years. In view of the aforesaid facts and following the same reasoning of the Tribunal in assessee’s own case for A.Y. 2008-09, we find no reason to interfere with the order of Ld.CIT(A). Thus, the grounds of Revenue are dismissed.
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2017 (6) TMI 1361
Non-consideration of the issues u/s 115JB and 80IB(10) - Interest u/s 234(B) and 234(C) - HELD THAT:- The matter will have to be remitted to the Tribunal with regard to non-consideration of the case of the assessee with regard to deduction under Section 80IB(10) of the Act. The learned Counsel for the assessee concedes that when the matter is being remitted, the Tribunal may also reconsider the issue about the interest u/s 234(B) and 234(C) afresh on its own merits in accordance with law.
Revenue does not seriously dispute that the matter is required to be remitted for reconsideration of the issue of interest u/s 234(B) and 234(C) of the Act and also about deduction u/s 80IB(10) of the Act.
The impugned order dated 21.02.2014 passed by the Tribunal is quashed and set aside. The Tribunal shall reconsider the case put forth by the assessee and the Revenue on all the issues afresh and on its own merits in accordance with law, expeditiously.
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